Whither the Duty of Good Faith in UK Insurance Contracts, John Lowry

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132 CONNECTICUT INSURANCE LAW JOURNAL [Vol. 16:1 simply, they will be held to have waived disclosure of the material fact which that inquiry would necessarily have revealed. Waiver is not established by showing merely that the insurers were aware of the possibility of the existence of other material facts; they must be put fairly on inquiry about them. 177 Longmore L.J., with whom Peter Gibson L.J. agreed, took the view that since the carriage of Rolex watches was a material fact which was not disclosed, the presentation of the risk was unfair. 178 The issue was, therefore, whether the facts that were disclosed would prompt a reasonably careful insurer to enquire whether watches were included in the shipment. As Longmore LJ explained, the issue came down to whether or not the insurer was “put on inquiry by the disclosure of facts which would raise in the mind of the reasonable insurer at least the suspicion that there were other circumstances which would or might vitiate the presentation.” 179 On the facts he held that there was nothing in the presentation of the risk that could be said to have raised the suspicion that Rolex watches were to be included in the consignment. 180 Of particular interest for present purposes is Rix L.J.’s dissenting judgment on this issue. In finding that there had been waiver, he placed particular emphasis on the mutuality of the duty of utmost good faith, and stated that the only relevant question was whether the presentation was fair. 181 This could not be judged in isolation, although an obviously unfair presentation would rarely leave room for waiver to operate. 182 The insurers’ reaction and the issue of possible waiver had to be taken into account. 183 The question is not whether an “unfair” presentation had been waived but whether, taking both sides into account, the presentation was unfair or, alternatively, it would be unfair of the insurers to avoid the contract on a ground on which they were put on inquiry and should have satisfied themselves by making appropriate enquiries. 184 177 LEIGH-JONES ET AL., supra note 175, 17-83. 178 WISE Ltd. [2004] EWCA Civ. 962. 179 Id. 180 Id. 181 Id. 182 Id. 183 Id. 184 WISE Ltd. [2004] EWCA Civ. 962.
2009] GOOD FAITH IN UK INSURANCE CONTRACTS 133 Ultimately, it seems, the question is: Has the insurer been put fairly on inquiry about the existence of other material facts, which such inquiry would necessarily have revealed? The test has to be applied by reference to a reasonably careful insurer rather than the actual insurer, and not merely by reference to what such an insurer is told in the assured's actual presentation but also by reference to what he knows or ought to know, ie. his s 18(3)(b) [of the 1906 Act] knowledge… Overriding all, however, is the notion of fairness, and that applies mutually to both parties, even if the presentation starts with the would-be assured. 185 Rix L.J. therefore concluded that a reasonably careful insurer would have been fairly put on inquiry given what he knew from GNP's presentation and his general, presumed knowledge. 186 The question as to what types of clocks were being transported was one that should have been asked by the reinsurers. He went on to state that: If the question is instead the overriding question: Is the ultimate assessment of GNP's presentation that it is unfair, or would it be unfair to allow the reinsurers a remedy of avoidance in such a case? I would answer that the presentation was fair, and that it would be unfair to allow reinsurers to take advantage of an error of translation in a case where, on the evidence, an exclusion of watches would seem to have been the obvious solution. 187 For Rix L.J., the duty of utmost good faith and, more particularly, its content insofar as it applies to insurers or reinsurers, requires them to play a pro-active role in the disclosure process rather than relying solely upon the insured’s presentation. 188 In this respect, his approach resonates with that taken by Lord Mansfield in Noble v. Kennoway, 189 and Court v. 185 Id. 186 Id. 187 Id. 188 See Merkin, supra note 162. 189 (1780) 99 Eng. Rep. 326.
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Whither the Duty of Good Faith in UK Insurance Contracts, John Lowry

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